Topic

Car buying guide

We explain the laws governing car sales, tell you how to deal with a dealer and how to decide if a car is worth buying. Plus reliable makes, car reviews and more.

When to trade up

Are regular trade-ups the smart thing to do?

It used to be that regular trade-ups of relatively new cars were the smart way to keep yourself on the road without paying too much in maintenance. But our surveys show cars are lasting way longer than they used to before the big repair bills kick in. So when should you buy a new one? Here's our advice.

Around a third of a new car's value will vanish by the end of the third year.

Run your car for as long as possible
One of the biggest costs of owning a car is depreciation, and the best way to minimise the effect of this is simple: keep your car longer. Around a third of a new car's value will vanish by the end of the third year, and half by 5 years. Thereafter, if it's a good car and you look after it, the rate slows down: by 10 years it will still hold around 20 percent of its value.

If you buy a 5-year-old car and keep it for 5 years, you'll lose a lot less than buying new. You might want to run it even longer. The extra costs of replacing worn items in a well-maintained old car should still be a lot less than the depreciation on a new or near-new car. Shop around to keep repair costs down.

Watch for rust
The big warning sign is rust. Once rust takes hold, the car loses value rapidly and it is expensive to repair. If your car has rust, it could be time to sell.

The good news, though, is that rust is not the problem it used to be. Remember all those rusted-out doors and station-wagon tailgates in the 1980s? You don't often see them now, because factory rust-prevention treatments are so much better.

Don't worry about the odometer
Don't worry about the odometer racking up large numbers. Once it clicks over 100,000 kilometres the distance travelled has less effect on the value. We hear of lots of cars that are still reliable at well over 200,000 kilometres.

Should you buy a new car?
Cars depreciate most during their first few years. That makes buying a new car and selling it after a few years a very expensive exercise. But many new cars can be bought at good discounts from the listed price. If you haggle hard to get a good discount and keep the car for at least 10 years, you will have the pleasure of buying a new car and you can ensure it is serviced regularly - so it should be reliable. Car safety improvements in recent years also means you will have a safer vehicle.

If buying new is not for you, then find a good car that has got past the worst part of the depreciation. But remember every time a car is sold, dealers take a chunk of profit. You pay that. Look for ...

2-3-year-old cars. They may have the remainder of the factory 3-year warranty, and are not too far behind in safety features.

Slightly older models, including Japanese imports, can be bought with factory-backed warranties under schemes run by the major car importers. The factory checks the cars, fixes any problems and sells them through dealer-approved schemes.

If your budget won't stretch that far, look for well-maintained models 6 or more years old, even with over 100,000km on the clock.

Buy a reliable model
Pick from the models we recommend for reliability. For full details, see our Car reliability report.

Most of the time, it's not a good idea to use a mate. If they miss something, it's bad luck.

But if you pay a specialist inspection service or your own garage or mechanic, they are required under the Consumer Guarantees Act to do the job to a reasonable standard according to your instructions. If they get it wrong, you can hold them liable for any losses you incur.

A full pre-purchase inspection will cost up to $120: not much in the total cost of the car.

The car itself is only half the story. There's also a lot of documentation to check, especially if you're buying from a dealer.

Warrant of fitness
Every vehicle sold by a dealer must have a warrant of fitness issued no more than one month before the date the vehicle is delivered to the buyer. Private sellers have the option of selling without a warrant, provided the car is clearly identified for sale "as is where is".

Consumer Information Notice
A dealer is required to attach to every motor vehicle displayed for sale a "consumer information notice" (CIN).

The information that must be disclosed in the CIN includes:

The name and business address of the dealer.

Whether the dealer is a registered motor vehicle trader.

The cash price of the vehicle.

Whether the vehicle is subject to road user charges.

Whether any security interest is registered over the vehicle.

The year in which the vehicle was manufactured or the manufacturer's designated "model year" or the year of first registration (for motor vehicles registered before 1 January 2007). For vehicles registered after 1 January 2007: the year of first registration anywhere in the world.

The make, model, engine capacity and fuel type of the vehicle.

The year in which the vehicle was first registered in New Zealand, or if the vehicle is a used import, the year it was first registered overseas.

The odometer (distance travelled) reading, or a statement that the the odometer reading is or may be inaccurate.

Whether the vehicle has been re-registered.

Whether the vehicle is recorded on the motor vehicle register as having been damaged when it was imported.

If you buy the car, you must be given a copy of the CIN.

Debts
If you buy privately, your car could be repossessed if there are any outstanding debts on it. Use a car history checking service to find out if the car is clear of debt.

If you buy from a registered motor vehicle dealer, you won't be liable for any such debts, unless you were told about them.

Ownership
The certificate of registration, which you should be shown, lists the current registered owner of a car. This should be the company or person - whether dealer or private - you are buying the car from.

If you're in any doubt about the ownership of a vehicle, call the police. They'll tell you if it's been reported stolen.

Sale agreement
If you're buying from a dealer, they must provide you with a written sale agreement and the Consumer Information Notice which you have signed. Don't sign an agreement until you have read and understood all the clauses, particularly those regarding interest rates and warranty costs. Beware of documentation fees charged by the dealer.

Change of ownership
Both the buyer and the seller have to fill out forms available from an NZTA agent (such as New Zealand Post). The buyer pays the fee and is ultimately responsible for the changeover.

If you're selling privately, make sure the changeover really has happened before you release the car. You don't want speeding or parking tickets turning up addressed to you.

Dealer finance is often expensive. You'll probably get a better deal from a bank. If you are a home owner, the cheapest finance you will get is by extending your house mortgage.

With any loan offer, check the time to repay, the monthly payments and the total cost of credit over the term of the loan. All lending organisations must provide this information, to allow you to compare the deals they offer.

If the dealer offers an interest-free loan, check there are no extra hidden fees and that the asking price hasn't been inflated.

Car inspection checklist

If you're buying a used car, print out our checklist and use it as part of your vehicle inspection.

Buying advice

Here are 9 important points to consider when you're buying a car.

Bargain if you can. Car yards expect their customers to negotiate. On a straight purchase, try to get 15 percent or so knocked off the ticket price. If you're paying cash, you might get even more. But there are exceptions. If there's a high-value trade-in offer, or it's a "sale price" to start with, the ticket price probably won't move very much - if at all.

You may also want some optional repairs or extras, which you can use as bargaining chips.

Get it fixed. If our checklist and the mechanical check reveal problems the car shouldn't have (because they make the car unsafe or are needed for a WOF), insist on having them fixed. Get this done - and have the car rechecked - before you buy.

Don't let the yard use these repairs as a price-bargaining tool. They should be done anyway, for the car to be on sale at all. Whatever work they agree to do, get it in writing before you sign up or pay over any money. Don't put a deposit down before an inspection.

Find 2 or 3 cars you like. If you have several cars in different yards that you're happy to buy, you'll be negotiating from a position of strength, because you'll be able to walk away if you don't get a good response. If you've only got one car on your list, don't let the sales rep know this - they'll drive a harder bargain.

Don't get obsessed about the odometer reading. How far a car has travelled could be less important than the condition it is in now. Cars don't suffer much from being driven long distances, as long as they are looked after, and many well-maintained cars these days can run for hundreds of thousands of kilometres.

So why the fuss about wound-back odometers? Because dealers charge higher prices for cars with low odometer readings. Also, they should provide a handy guide to the likely condition of the car, especially the engine. If, for example, the car has done 95,000km, you'll know it's probably time for a new timing belt and other major service checks.

The average family car does about 14,000km per year, although many privately owned vehicles do quite a lot more. If the odometer reading is significantly under that figure, you might want to find out why. If you don't trust the dealer's explanation, ask the local franchise holder if they have any information on the car. If they can't help, ask your mechanic for an opinion. They will be able to tell you whether the reading is consistent with the car's overall condition.

But remember, be guided by the combined results of your visual inspection, mechanical check and test drive, rather than what's on the clock.

Buy a white car. Safety features are important. From the mid-1990s, safety features like ABS braking, air bags and side intrusion bars have become common in many cars, even some quite small ones. More recently, electronic stability control has become increasingly common in new vehicles.

But one of the biggest safety features of all is colour. In a major European study, black cars accounted for 22 percent of accidents, even though they made up only 4.4 percent of all cars on the roads! Dark-coloured cars are far less visible to other drivers.

Know what's critical. If there's a serious oil leak it won't help much to have a CD player thrown in.

Don't rely on the "AA appraised" notice. Many yards have their cars "AA appraised", but this is a pass/fail basic check and does not indicate a full, itemised pre-purchase inspection.

Beware extended warranties. The Consumer Guarantees Act spells out the basic minimum protections available when you buy a car from a dealer.

Mechanical breakdown insurance, also known as an "extended warranty", may remove the potential for dispute if a problem does emerge, but many provide no greater protection than what you're already entitled to under the Act.

If you are interested in buying the dealer's "extra" cover, carefully check the difference between what it offers and what you get in law anyway. Also ask about special requirements such as regular servicing. If an extended warranty is offered as part of the price and you don't want it, ask for a discount.

Deal with a dealer. If you buy from a dealer, you are protected by a range of legal requirements that do not apply to private sales.

Tricks of the trade

Car dealers use a lot of tricks - there are 3 big ones to watch out for:

A high asking price

The trade-in deal is a trap

Up-selling is the aim

A high asking price
Whether new or used, the dealer's price is usually only what they hope to get. Aim 20 percent lower for a new model and 15 percent lower for a used car. They'll expect it. In the current economic climate, dealers will be very keen to sell.

There may be exceptions. Cars are put on "special" from time to time. Don't expect discounts from these prices. Some manufacturers, notably Honda, have a "no haggle" type of pricing structure. We think you should still try to haggle - just don't be too surprised if you can't budge them.

The trade-in deal is a trap
Some dealers advertise minimum trade-in prices: $3150 if you can drive it in the gate, for example. It probably means $3150 has been added into the window price of the cars for sale.

Before you decide on a trade-in, find out how much both cars are worth. Check the ads in newspapers and car sale websites.

Say you want to buy a car with a ticket price of $15,000. The dealer offers you $3000 as a trade-in, so you'll have to pay $12,000. But if you don't do a trade-in, you might still be able to knock $2000 off the asking price - after all, that's under 15 percent. If you then sell your car privately for $4000, you'll be $3000 better off.

Up-selling is the aim
Seen a really good deal on a basic car? Count the seconds before they start talking about flasher models or add-on extras. Sure, air-conditioning is a worthy addition, but another dealer may have a similar model with it already fitted at a better price. Know what you want, and shop around.

History checks

If you buy from a dealer, they are required by law to give you "good title". But if you buy privately, the car could be repossessed if there are debts on it. Several services allow you to check.